The Drug Enforcement Administration (DEA) is taking significant steps toward rescheduling cannabis, which could change its classification from a Schedule I to a Schedule III substance under the Controlled Substances Act. This shift would be historic, as cannabis has been listed as a Schedule I drug—reserved for substances with high abuse potential and no recognized medical use—for over 50 years.
This proposed change follows recommendations from the Department of Health and Human Services (HHS), which determined that cannabis has potential medical value. However, despite the rescheduling, several practical challenges remain, especially for state-licensed cannabis businesses. One major benefit of the rescheduling is the potential relief from Section 280E of the Internal Revenue Code, which currently prohibits businesses from deducting expenses related to Schedule I and II drugs from their federal taxes. With cannabis in Schedule III, these businesses could finally gain access to more favorable tax treatment.
However, rescheduling does not equate to full legalization. Federal penalties for certain cannabis-related activities would still apply, and state-level legal markets would continue to operate under a complex and sometimes contradictory legal framework. The rescheduling could also open up more opportunities for scientific research by lowering barriers that currently hinder studies on Schedule I drugs.
The DEA’s process includes a hearing in December 2024, which may take months or even years to complete. Stakeholders, including medical professionals, law enforcement, and cannabis advocates, have submitted over 43,000 comments, with a significant majority supporting the move. Despite growing bipartisan support for rescheduling, challenges remain, including potential opposition from conservative lawmakers and logistical concerns over federal and state policy alignment.
For cannabis industry stakeholders, it’s crucial to stay informed and engaged in this process, as the DEA’s decisions will significantly impact the future of both medical and adult-use cannabis markets across the country. (Cannabis Biz Exec) (420 Intel) (Marijuana Moment)